Directors of leading Canadian companies see steep drop in compensation says new study.

    TORONTO, Feb. 11 /CNW/ - The value of shares granted as compensation to
directors of leading Canadian companies fell sharply during last fall's market
turmoil, according to a new analysis of governance practices of 100 of the
largest Canadian companies by Spencer Stuart.
    The 2008 Canadian Spencer Stuart Board Index (CSSBI) shows that the value
of equity holdings of these directors fell by an estimated 34% as of October
31, 2008, more than $200,000 less than the value at the year end of 2007.
    The finding also illustrates how the directors of leading Canadian
companies have become more closely aligned with shareholder interests, by
having to accept a significant portion of their compensation in equity and to
holding a specified minimum level of shares (most commonly at least 3 times
the value of their annual retainer).
    "Widely adopted minimum share ownership guidelines, and the fact that
directors have increasingly chosen to take compensation in equity, means that
directors have more at stake than they did a decade ago," says Andrew
MacDougall, who leads Spencer Stuart's Board Services Practice in Canada.
"Directors of Canada's leading Canadian companies are exposed to market risk,
and the reality is that a significant portion of their compensation has eroded
in value."
    In 2008, the median total director retainer for CSSBI 100 companies had a
value of $90,000, with 43% in equity. The figure was 13% higher than 2007,
with two-thirds of the increase driven by higher equity grants.
    The 13th annual Canadian Spencer Stuart Board Index published by the
global executive recruiting firm Spencer Stuart, studies director
compensation, governance practices and trends for 100 of the largest publicly
traded Canadian companies (annual revenues exceeding $1 billion) and includes
comparisons with comparable U.S. companies.

    Other highlights from the 2008 CSSBI include:

    Board Composition

    -  The 2008 CSSBI features an analysis of the more than 600 directors
       appointed to CSSBI 100 boards since 2000.

    -  Individuals without prior public company experience ("first timers")
       are being increasingly appointed to the boards of CSSBI 100 companies;
       First Timers made up and average of 24 % of all new board appointments
       from 2006 to 2008, up from 14 % from 2002 and 2005. From 2006, women
       accounted for 38% of all first time director appointments.

    -  Nearly half of the director appointed last year to CSSBI 100 boards
       had financial experience; the demand for such skills has grown
       steadily since 2006, returning to a level last seen post Sarbanes-

    -  In 2008, close to one quarter of new CSSBI 100 directors were from
       outside Canada, on average the same level since 2000.

    -  In 2008, the proportion of women directors serving on CSSBI 100 boards
       showed its first increase since 2005, edging up 5% over the prior
       year. Women made up 21% of all new board appointments from 2006 to
       2008, up from 13% from 2002 to 2005. CSSBI 100 boards have also caught
       up to the boards of comparable U.S. firms in terms of gender
       diversity. The number of women holding board and committee chair roles
       within the CSSBI 100 increased by 76% over 2004.

    Board Director Compensation

    -  Ninety-three % of CSSBI 100 companies have instituted minimum
       shareholding requirements for their independent directors compared to
       75% of comparable U.S. firms. The median minimum shareholding
       requirement is three times the retainer value.

    -  The 2008 median CSSBI 100 board director retainer was $90,000, 43% of
       which came in the form of equity. That figure represented a 13%
       increase over the prior year. Between 2005 and 2008, the median
       director retainer increased 20% on a compounded annual growth basis
       (CAGR): The cash portion rose 12%, while equity grew 30%, measured
       across the set of 68 CSSBI companies that have remained constant on
       the Index since 2005.

    -  Eight CSSBI 100 boards provided one-time equity grants to newly-
       appointed directors, in addition to their other compensation. These
       grants were worth close to $100,000 on a median basis.

    -  More than 80% of CSSBI 100 directors chose to invest at least a
       portion of their cash compensation in equity, and more than half (56%)
       chose to invest all of their cash compensation in equity (mostly in
       deferred stock units).

    Board Process, Organization and Policies

    -  Of the 82 CSSBI 100 boards which confirmed a mandatory retirement age
       requirement (i.e., they clearly either had one or they didn't), 59%
       had such a policy in place, compared with approximately 74% of
       comparable U.S. firms. For both groups, the proportion of companies
       with such a requirement dropped slightly, by 5%, over last year. For
       these companies, the most common retirement age was 70 years (with a
       range of 70-75), versus 72 for comparable U.S. firms. Eight % of
       surveyed companies have considered removing their mandatory retirement
       requirement for board directors. Twenty-one CSSBI 100 companies
       allowed exceptions to their mandatory retirement age, similar to the
       number last year.

    -  As a result of a recent Canadian Securities Administrators (CSA) rule,
       almost four in five CSSBI 100 companies disclosed the names of
       consultants retained by the board to advise on CEO and senior
       executive compensation packages. The majority (62%) of those boards
       reporting this now ensure that their consultants work exclusively for
       the board, up from the 51% reported in last year's CSSBI. A growing
       number also reported the fees and retainers paid to executive
       compensation consultants.

    -  The vast majority of surveyed CSSBI 100 boards (86%) did not formally
       limit the number of boards on which a director can serve. For the 14%
       of boards that did, most had a limit of four corporate boards. A third
       of surveyed CSSBI 100 companies restricted the number of audit
       committees on which a director could serve. The majority (58%)
       restricted service to three audit committees in total, while 33%
       restricted it to two.

    The 13th annual Canadian Spencer Stuart Board Index is available on
Spencer Stuart's web site

    Spencer Stuart is one of the world's leading executive search consulting
firms. Privately held since 1956, Spencer Stuart applies its extensive
knowledge of industries, functions and talent to advise select clients -
ranging from major multinationals to emerging companies to nonprofit
organizations - and address their leadership requirements. Through 51 offices
in 27 countries and a broad range of practice groups, Spencer Stuart
consultants focus on senior-level executive search, board director
appointments, succession planning and in-depth senior executive management
assessments. Spencer Stuart was the first global executive search firm to
enter Canada, helping clients across the country since 1978 to achieve
outstanding leadership solutions for their organizations from our offices in
Toronto, Montreal, and Calgary.

    The premier firm for board counsel and recruitment, Spencer Stuart
conducts over half of all director assignments handled through executive
search. For nearly 25 years, our Board Services Practice has helped boards
across Canada and around the world, recruit independent directors and provided
advice to chairs, CEOs and nominating committees on important governance
issues. In the past year alone, we have conducted more than 400 director
searches. We are the firm of choice for both leading corporations (e.g. S&P
500 and FP 500 companies) and smaller organizations, conducting more than
one-third of our assignments for companies with revenues under $1 billion. In
addition to our work with clients, Spencer Stuart has long played an active
role in corporate governance by exploring - both on our own and with other
prestigious institutions - key concerns of boards and innovative solutions to
the challenges facing them. In 2000, Spencer Stuart co-founded, with the
Conference Board of Canada, the National Awards in Governance, celebrating
board achievements in each the private, public and not-for-profit sectors.

For further information:

For further information: Mark Limonchik, Project Manager, (416)

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